Attorney General Baker Announces Twelve Million Dollar Medicaid Settlement With Bristol-Myers Squibb and Apothecon Over Allegations of Kickbacks, Illegal Drug Pricing and Off-Label Use

July 15, 2008

Bristol-Myers Squibb will pay Georgia’s Medicaid program $12,086,454.16 under a settlement reached with Attorney General Thurbert Baker. The settlement arose out of charges made by Baker and other federal and state officials that Bristol-Myers Squibb and its former wholly-owned subsidiary Apothecon, Inc. engaged in illegal drug marketing and pricing of certain prescription medications, resulting in total losses to Medicaid programs nationwide of over $389 million.

The allegations by Baker and others maintained that Bristol-Myers Squibb and Apothecon engaged in a range of wrongful conduct, including:

Reporting inflated prices for various prescription drugs knowing that Medicaid and various federal health care programs would use these reported prices to pay for Bristol-Myers Squibb and Apothecon products used by their recipients;

Making illegal payments to physicians, health care providers, and pharmacies to induce them to purchase Bristol-Myers Squibb and Apothecon products;

Promoting the sale and use of Abilify, an antipsychotic drug, for use on children as well as for treatment of dementia-related psychosis, neither use for which the federal Food and Drug Administration had granted approval; and

Misreporting sales prices for Serzone, an antidepressant, resulting in the improper reduction of the amount of rebates paid to the state Medicaid programs.

While pleased that Bristol-Myers Squibb and Apothecon had settled over the allegations, Attorney General Baker expressed concern over the conduct which gave rise to the settlement. “The allegations were that these companies not only engaged in a pattern of kickbacks and false reporting to drive up both the sales and prices for its drugs, they also encouraged healthcare providers to prescribe a potent drug to both children and seniors for uses that had not been approved by the FDA,” Baker stated. Baker went on to add that “the drive to make certain that the bottom-line meets Wall Street expectations can never justify defrauding the taxpayers or putting our must vulnerable citizens at risk.”

The settlement reimburses Georgia, the federal government and 42 other states for excessive amounts paid by Medicaid programs as a result of this conduct. As part of the settlement, Bristol-Myers Squibb has also entered into a Corporate Integrity Agreement with the United States Department of Health and Human Services, under which Bristol-Myers Squibb will be required to make accurate and comprehensive reports going forward to ensure that the states’ Medicaid programs do not incur similar costs going forward.

Members of Georgia’s Healthcare Fraud Control Unit as well as officials with the National Association of Medicaid Fraud Control Units and the United States Department of Justice were instrumental in recovering these funds for the taxpayers of Georgia.